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. Last Updated: 07/27/2016

Nord Stream to Hike Cost Estimates

Itar-TassConstruction workers completing the first section of the Nord Stream pipeline that will run under the Baltic Sea.
Nord Stream, the firm building a subsea gas pipeline from Russia to Western Europe, said Thursday that early next year it would revise upward the project's costs, which analysts say may soar by at least 60 percent.

Nord Stream, majority owned by Gazprom, has said it would take at least 5 billion euros ($7.3 billion) to build the 1,200-kilometer pipeline under the Baltic Sea from Russia to Germany.

"We are most likely to increase the estimated costs of the project in early 2008, after we complete evaluation of four main expense categories, such as pipes, pipe-laying, logistics and environment," spokeswoman Irina Vasilyeva said.

She said the main reason for the review was a steep increase in steel prices since costs were first estimated in 2005.

A Nord Stream spokeswoman in Switzerland, where the group is based, confirmed that it would only be possible to make a new cost estimate in February or March.

Nord Stream could not say how much costs might rise, but media Wednesday quoted Germany's former chancellor Gerhard Schr?der, as saying in New York that they might balloon to 8 billion euros ($11.8 billion).

Schr?der chairs the supervisory board of the Nord Stream consortium, which apart form Gazprom, which owns 51 percent, involves German firms BASF and E.On, with 20 percent each, and Dutch Gasunie with 9 percent.

E.On Ruhrgas CEO Burckhard Bergmann told reporters Wednesday that the Nord Stream costs were likely to turn out to be more expensive than many energy projects across Europe, but declined to specify a new figure.

A spokesman for BASF said the company had already said in presentation over a year ago that the figure might rise to 9 billion euros ($13.2 billion).

Analysts said an increase to at least $12 billion was very likely, as Nord Stream faces rising global prices for materials and services and other environmental challenges.